Question 31 Chapter 4 of +2-A – T.S. Grewal 12 Class Part – A Vol. 1

Question 31 Chapter 4 of +2-A

Question 31 Chapter 4 of +2-A

31. Suresh, Ramesh, Mahesh and Ganesh were partners in a firm Sharing profits in the ratio of 2 : 2 : 3 : 3. On 1st April, 2016, their Balance Sheet was as follows:

Liabilities     Assets  
Capital A/cs:     Fixed Assets 6,00,000
Suresh  1,00,000   Current Assets 3,45,000
Ramesh 1,50,000      
Mahesh 2,00,000      
Ganesh  2,50,000  7,00,000     
Workmen Compensation Reserve   75,000    
         
    9,45,000     9,45,000

From the above date, the partners decided to share the future profits equally. For this purpose the goodwill of the firm was valued at 90,000. It was also agreed that:

  1. Claim against Workmen Compensation Reserve will be estimated at 1,00,000 and fixed assets will be depreciated by 10%.
  2. The Capitals of the partners will be adjusted according to the new profit-Sharing ratio. For this, necessary cash will be brought or paid by the partners as the case may be.
    Prepare Revaluation Account, Partners’ Capital Accounts and the Balance Sheet of the reconstituted firm.

 

The solution of Question 31 Chapter 4 of +2-A

 

Revaluation A/c
Particulars
Amount Particulars

Amount
To Depreciation on Fixed Assets A/c   60,000 By Profit on Revaluation*1   85,000
To Prov. for Claim against WCF A/c   25,000 Suresh’s Capital A/c 17,000  
      Ramesh’s Capital A/c 17,000  
      Mahesh’s Capital A/c 25,500  
      Ganesh’s Capital A/c 25,500  
    85,000     85,000

Dr

Partners’ Capital Accounts
for the year ended 31st March, 2019

Particulars

Suresh
Ramesh
Mahesh
Ganesh
To Revaluation A/c 17,000 17,000 25,500 25,500
To Mahesh’s Capita A/c *2 2,250 2,250    
To Ganesh’s Capital A/c *2 2,250 2,250    
To Cash A/c’s (B. fig)     25,250 75,250
To Balance c/d
1,53,750
1,53,750
1,53,750
1,53,750
  1,75,250 1,75,250
2,04,500
2,54,500

 

Cr

Partners’ Capital Accounts
for the year ended 31st March, 2019

Particulars

Suresh

Ramesh
Mahesh
Ganesh
By Balance B/d 1,00,000 1,50,000 2,00,000 2,50,000
By Suresh’s Capital A/C*2     2,250 2,250
By Ramesh’s Capital A/c*2     2,250 2,250
By Cash A/c (B. fig) 75,250 25,250    
         
    1,75,250 1,75,250
2,04,500
2,54,500

 

Balance Sheet
as on 01st April, 2019
Particulars
Amount Particulars

Amount
Provision of Claim against WCF   1,00,000 Fixed Assets   5,40,000
Sundry Creditors   1,70,000 Current Assets   3,45,000
Capital A/c          
Suresh 1,53,750        
Ramesh 1,53,750        
Mahesh 1,53,750        
Ganesh 1,53,750 6,15,000      
    8,85,000     8,85,000

 

Working Note : 

WN *1 Calculation of Total Combined Capital in New Profit Sharing Ratio: –

Amount of Suresh’s Capital = 85,000 X 2
10
  = 17,000    

 

Amount of Ramesh’s Capital = 85,000 X 2
10
  = 17,000    

 

Amount of Mahesh’s Capital = 85,000 X 3
10
  = 25,500    

 

Amount of Ganesh’s Capital = 85,000 X 3
10
  = 25,500    

 

Old Ratio of X, & Y = 2 : 2 : 3 : 3  
New Ratio of X, & Y = 1 : 1 : 1 : 1

Calculate the Sacrificing or Gaining Ratio of Partners
Sacrificing or Gaining Ratio = Old Ratio – New Ratio

Suresh’s Share Sacrificing/Gaining = 2  – 1
10 4
  = 8 – 10
  40
  = 2  (Sacrifice)
  40

 

Ramesh’s Share Sacrificing/Gaining = 2  – 1
10 4
  = 8 – 10
  40
  = 2 (Sacrifice)
  40

 

Mahesh’s Share Sacrificing/Gaining = 3  – 1
10 4
  = 12 – 10
  40
  = (-2) (Gain)
  40

 

Mahesh’s Share Sacrificing/Gaining = 3  – 1
10 4
  = 12 – 10
  40
  = (-2) (Gain)
  40

 

Date Particulars
L.F. Debit Credit
2019 Mahesh’s Capital A/c Dr   4,500  
  Ganesh’s Capital A/c Dr   4,500  
  To Suresh’s Capital A/c*1       4,500
  To Ramesh’s Capital A/c*1       4,500
  (Being Mahesh and Ganesh compensate ram and Mohan)        

 

 

WN *2 Calculation of Amount of Goodwill Debited/Credited to the Capital a/c : –

 

Suresh’s Capital Credited with = 90,000 X 2
10
  = 4,500    

 

Ramesh’s Capital Credited with = 90,000 X 2
10
  = 4,500    

 

Mahesh’s Capital Debited with = 90,000 X 2
10
  = 4,500    

 

 

Ganesh’s Capital Debited with = 90,000 X 2
10
  = 4,500    

 

  1. Mahesh will compensate Suresh and Ramesh in the ratio 1 : 1 for Goodwill
  2. Ganesh will compensate Suresh and Ramesh in the ratio of 1 : 1 for Goodwill

 

Partner’s New Capital = Total of Debit side of Capital A/c – Total of Debit side of Capital A/c
Suresh’s New Capital = 1,00,000 – 21,500
  = 78,500  
Ramesh’s New Capital = 1,50,000 – 21,500
  = 1,28,500  
Mahesh’s New Capital = 2,04,500 – 25,500
  = 1,79,000  
Ganesh’s New Capital = 2,54,500 – 25,500
  = 2,29,000  
Total Combined Capital = 6,15,000
 

WN *3 Calculation of Total Combined Capital in New Profit Sharing Ratio: –

 

Amount of Suresh’s New Capital = 6,15,000 X 1
4
  = 1,53,750    

 

Amount of Ramesh’s New Capital = 6,15,000 X 1
4
  = 1,53,750    

 

Amount of Mahesh’s New Capital = 6,15,000 X 1
4
  = 1,53,750    

 

Amount of Ganesh’s New Capital = 6,15,000 X 1
4
  = 1,53,750    

 

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

  • Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
  • Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
  • Chapter No. 3 – Goodwill: Nature and Valuation
  • Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
  • Chapter No. 5 – Admission of a Partner
  • Chapter No. 6 – Retirement/Death of a Partner
  • Chapter No. 7 – Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

  • Chapter No. 1 – Financial Statements of a Company
  • Chapter No. 2 – Financial Statement Analysis 
  • Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
  • Chapter No. 4 – Accounting Ratios
  • Chapter No. 5 – Cash Flow Statement

 

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2 Book 1 min - Question 31 Chapter 4 of +2-A - T.S. Grewal 12 Class Part - A Vol. 1
Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms

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